Rebosis Property Fund has published its reviewed interim financial results for the six months ended February 2022, reporting an increase in its distributable income to R72.5 million from a R71.3 million loss in the prior comparative period.
The increase is mainly due to lower finance costs of R358 million (2021: R516 million) which was partly driven by a lower repo rate. Other operating expenses also decreased to R76 million (2021: R94.5 million) due to no expenses incurred for the deferred payment liability in the current period.
Net property income decreased by 6% when compared on a like-for-like basis to the prior period.
“The retail portfolio performed well as shoppers returned to malls following Covid-19 related trading restrictions, with year-on-year footfall growth of 14.8%, turnover growth of 11.5% and annualized trading densities up by 7.4%. We successfully renewed 95 930m2, across both the retail and commercial office portfolios, in particular at Hemingways Mall in East London and various Department of Public work renewals. New leases of 9 833m2 was also concluded in the six-month period,” commented Chief Executive Officer Otis Tshabalala.
Vacancies in Rebosis’ retail portfolio accounted for 12.89% of the portfolio, with the mainly sovereign-let office portfolio recording vacancies of 24%, resulting in a combined average portfolio vacancy of 20% (excluding office assets earmarked for conversion to student accommodation).
SA REIT cost-to-income ratio was calculated at 46% while SA REIT administrative cost-to-income ratio increased slightly to 9% from 8% in the previous comparable period.
The portfolio, including investment property held for sale, was valued at R13 billion (2021: R13.1 billion), translating to a R156 million drop in asset value due to the devaluation of R134 million in the company’s retail portfolio.
The disposal of a portion of the company’s office portfolio for a revised aggregate cash consideration of R3.3 billion continues, as communicated to shareholders which is expected to be concluded in the current financial year. The disposal is expected to create some liquidity and to return the company to a better loan-to-value position.
“Going forward, we will continue to focus on improving property fundamentals in the current financial year, including emphasis on leasing alternatives, especially at Forest Hill Shopping Centre, to reduce vacancies and increase revenue. We will continue to prioritise negotiations with our funding providers on the renewal of expired and near-term debt facilities to bolster our liquidity in the rising interest rate environment”.
“We remain cautiously optimistic of the improved trading densities and dominant position of our retail portfolio in the context of rising interest rates and higher food and fuel costs, which is expected to constrain consumer spending. We are developing specific initiatives to bring a differentiated shopping experience within the catchment area of each of our retail centres,” concluded Tshabalala.